Currently, the stock of Aurcana Corporation (CVE:AUN), (PINK:AUNFF) seems composed and imperturbable on the TSX Venture Exchange (CVE). It continues its calm float on the Canadian market, advancing very slowly in price. Not surprisingly so. There are no new announcements or events that could disrupt the move of the company’s share price.
As a matter of fact, the stock has been progressing for about two weeks. Over that period, AUN has gained 25% to close yesterday’s session at $0.700 per share. This was, maybe, a result from several company developments in January. Probably, the most significant ones were the appointment of a professional geological exploration expert to the Technical Advisory Committee and the start of construction at Aurcana’s Shafter silver mine, located in Texas. The mine is scheduled to start silver production in mid-2012 and is expected to produce 3.8 million ounces per year.
It is not very clear how the stock will continue to perform in the coming days, especially in the lack of recent news. In such a case, we could analyse Aurcana’s financial condition, which might serve as a base for any supposed prediction of a future change in the share price. As mentioned in an earlier article, the latest reports for the third quarter of 2010 reveal that the negative trends prevail over the positive:
- revenues have increased by 43% compared to the Q3 of 2009, and gross profit has jumped up by 72% BUT:
- in comparison with the relevant three-month period of 2009, the net income has fallen by 42%, as the operating expenses have climbed up by 130%;
- At the end of September 2010, Aurcana had $0.253M in cash – 82% less than a year before that.
The mentioned figures maybe imply that Aurcana has not enough potential for a significant rise in the share price. According to the financial statements, the net tangible worth of the company is less than $23M, while its present market value is over $227M. This huge difference leads to the conclusion that Aurcana’s shares are probably overvalued.
